Vodafone company analysis
Written work for International Business class
Assignment #2
Mykolas Navickas, Tomas Daukša, Andrius Leonovas, Evelina Lyvaitė. Ernestas Švoba, Arnas Žukas, Linas Baltrūnas
ISM University of Management and Economics
Bachelor studies. Program of economics
Written work for International Business class. Lecturer – Vladimir Kolchanov
Kaunas, 2014
Contents
1. Opportunities in the market 2
2. Generic strategy 2
3. Ownership arrangement 3
4. Organizational architecture 6
4.1. Organizational Structure 6
4.2. Control systems 9
4.2.1. The balanced scorecard methodology 9
4.2.2. Scorecard in SCM 10
4.3. Processes 10
4.4 Organizational culture 10
4.5. People 11
5. References 13
Opportunities in the market
Since Vodafone is a strong player in international market plenty of opportunities exist for them. As a tool of evaluation how much opportunities exist in the international mobile phone market we have chosen to use Porters Five Force Model that includes: Rivalry with Existing Competitors, Bargaining Power of Buyers, Bargaining Power of Suppliers, Potential Entrants, and Product Substitutes. To begin with Rivalry with existing competitors Vodafone has a strong advantage on operation costs, since they are operating on a global scale they have a good deals with their partners that allow reducing the costs of operations as much as possible, so they can easily enter to the new markets. The bargaining power of buyers is strong in telephony industry and usually they reduce the cost leaders prices, but not past the level of their closest competitor. It means that Vodafone will profit at above average returns it allow Vodafone to successfully operate even in a poor countries. Suppliers play a very important role in telephony industry as well. By being a large player of the mobile telephony industry, Vodafone could hold suppliers costs down, and it could make a profit even if its competitors are making only average returns. Talking about potential entrants Vodafone has a strong focus on reducing costs below that of its competitors in order to make an entrance to mobile industry unattractive to its potential competitors. According to our analysis identified two possible opportunities in international mobile phone market, the first one is to offer really low prices and the second one expand the operation in even more countries worldwide.
2. Generic strategy
According to Porter’s Generic Strategies Vodafone has the broad Target Scope and operates in international markets all over the globe. As an advantage Vodafone employs uniqueness perceived by the consumers, this strategy allows to charge higher price for their services. Moreover, it keeps customers attached to differentiating attributes and highly reduce threat of substitutes by competitors. What is more, they are using differentiation strategy that focus more on service that offers unique attributes that are seen by customers and that customers perceive to be better than or different from the products of the competition this factor also increase brand loyalty. So, Vodafone do not use lowest price strategy and has a wide range of different services such as roaming, network roadmap development and many others. To sum up, this particular generic strategy made the Vodafone very strong international player in the market.
3. Ownership arrangement
Vodafone is one of the world‘s leading mobile communication providers, operating in more than 30 countries and have partnerships with networks in over 40 more. This multi-national company has almost 360 million customers around the world. Vodafone is the one which made very first mobile phone call in 1st of January, 1985.Vodafone is British company, having 19 million customers in this market. Also they have 19 subsidiaries – Albania, Czech Republic, Germany, Greece, Hungary, Ireland, Malta, Netherlands, Portugal, Romania, Spain, Turkey, UK, Egypt, Ghana, India, New Zealand, Qatar and Vodacom Group. Most of them are in Europe, as it is closer to the home country and easier to control it, also cultures and needs are similar. Furthermore, Vodafone has 4 joint ventures - Australia, Italy, Fiji and Indus Towers. All of them, except Italy, are far away from UK, so we see obvious reasons why Vodafone for these countries choose joint ventures. As it could look strange, Vodafone in UK has only 25% market share (compared to Vodacom Group in South Africa – 59% market share). In Italy and Germany they have 35% market share, Spain 29%, India 21%. These are the main markets for Vodafone – 298 million customers and £31.3 billion revenues.